THE STOCKTHROUGHPUTSOLUTION TRANSIT AND STOCK

IN A SINGLE POLICY

WHAT IS IT?An “All Risks” Marine Cargo policy, suited to retailers, manufacturers and traders, covering:

� Inland and international transits by any mode of transportation

� Inventory (stock), including raw materials, work in progress as well as finished goods

THE BENEFITS � Seamless cover, avoiding gaps in cover:

ɞ Stock and transit in one single policy ɞ Cover on a “cradle to grave” basis

� Simplification of claims settlement: Referral to one policy in event of a claim

� Reduced administration: ɞ Generally no shipment or location

reporting requirements ɞ Premium based on a single rate applied

to sales turnover � Lower premium spend: One single policy rather

than multiple policies � No time restriction how long goods are in store � Competitive stock deductibles: Stock deductibles

generally lower in the cargo market � Beneficial stock limits: Cover on an “any one

location” basis avoiding named location limits � Reduced business interruption exposure

on non-marine placement: Basis of valuation linked to final sales price

� Frees up capacity in the non-marine markets: Stock/inventory values placed in the marine market

� Flexibility: Insured can choose which exposures they wish to include under their stock throughput

� Control over insurance: By insuring stock/ inventory in third party locations insured determines scope of cover, based on their requirements

STOC

KTH

ROUG

HPUT

STOCK THROUGHPUT - HOW IT WORKS

PLACEMENT STRUCTURE COMPARISON

Pre-manufacture stock Pre-manufacture stock

factory or distribution warehouse

One single ‘per location’ limit for stock. Avoiding named location limits. One single limit for transit

Including during manufacturing but not losses resulting from the manufacturing process

Storage of finished products

Manufacturing plant/Factory

Local purchase of supplies, raw materials/finished products

Imported purchase of supplies, raw materials/finished products

Local transport Final distribution

Transit to final customer

Overseas storage

Incoming

OutgoingStorage

Deductible/Retention

Property

Traditional Structure

Stock Throughput and Property Option

Real PropertyPersonal Property

InventoryBusiness Interruption

Ocean Marine Transit

Inland Transit

Separate Individual Policies

Integrated Program

Stock Throughput

FREQUENTLY ASKED QUESTIONSIS THIS A NEW CONCEPT?No. This is a tried and tested concept which has been placed in the cargo insurance market for over 25 years. Stock throughputs are an integral part of most insurer placement portfolios.

WHAT HAPPENS TO MY EXISTING PROPERTY POLICY?Your existing property policy will remain in place for your buildings/assets and business interruption (BI). The stock however, will be removed from this policy and placed in the marine insurance market. This will reduce your property damage/business interruption overall premium expenditure (although your marine premium may increase). In order to maintain BI coverage for ongoing loss of profits etc, your property damage/BI policy should be specifically amended to provide BI cover arising out of damage to stock even though that policy will no longer be insuring the physical damage to the stock.

DO I STILL HAVE BUSINESS INTERRUPTION (BI) COVER ON MY STOCK?There is no formal BI cover for the stock. However, the basis of valuation is usually negotiated on final sales price, which includes gross profit. This means that there is actually an improvement in the basis of valuation, as the final calculation of a stock and BI loss is much simpler.

WHAT ARE THE BENEFITS OF INCLUDING STOCK UNDER A STOCK THROUGHPUT POLICY?

� Improved basis of valuation � Improved coverage on unnamed locations � Wider coverage terms (‘A’ Clauses on

stock and not on a named peril basis) � Cargo insurers will cover third party

locations that the non-marine market would not include

WHEN DOES COVER CEASE?In most cases, cover ceases upon delivery to final customer. For some business this may include coverage whilst in showrooms, or in stores before the final customer purchases the item.

HOW DO I PAY MY PREMIUM?There is flexibility as to the basis of premium payment. The most usual method is to set up an initial deposit premium which is then adjustable on expiry at a single rate based on sales turnover or total cargo values.

IS IT ALWAYS CHEAPER?No. It does depend on the various states of the marine cargo and property insurance market and their interaction. However, these markets are often in different cycles to one another. Particularly when the property/non-marine market is hard, the marine market may offer better possibilities of savings in not just premium but also in levels of deductible/ self-retention.

WILL MY CURRENT INSURER BE ABLE TO OFFER THIS PRODUCT?Many domestic insurers will not be able to offer this product without access to the international markets and an international brokerage, such as Willis.

HOW WILL CLAIMS BE HANDLED?Your claim will be handled by your cargo claims specialist, with all documentation on the loss being directed to your marine insurer rather than your property insurer. Unlike other major brokers, Willis does not outsource its claims service. With over 100 claims specialists globally we are dedicated in assisting you in getting your claim resolved by your insurers promptly, to your satisfaction and with a minimum amount of disruption.

QUESTIONNAIRE INBOUND SHIPMENTS

� Description/type of goods travelling inbound (give % split) � From where do the goods originate? (give % split) � Valuation basis of inbound goods � Average and maximum shipment values � Packing details � Primary coverage or contingent coverage (give % split)

OUTBOUND SHIPMENTS � Description/type of goods travelling outbound (give % split) � What are the destinations of outbound goods? (give % split) � Valuation basis of outbound goods � Average and maximum shipment values � Packing details � Primary coverage or contingent coverage (give % split)

INVENTORY COVERAGE � Storage locations (complete addresses) � Valuation basis whilst static � Average and maximum monthly inventory exposure

per location � Construction details of the locations � Survey reports may be required

INTERCOMPANY MOVEMENTS � Average and maximum shipment values of these movements � Valuation basis of these shipments � Total annual values exposed

GENERAL � Background details of the insured’s operations � Annual sales turnover � Loss history for transits and inventory for the past five years

from ground up/first dollar � Preferred deductible levels � Rights of recovery against hauliers and other third parties

Depending on the nature of the risk additional information may be required at a later date.

13370/08/14

This newsletter is published for the benefit of clients and prospective clients of Willis. It is intended to highlight general issues relating to the subject matter which may be of interest and does not necessarily deal with every important subject nor cover every aspect of the subjects contained herein. If you intend to take any action or make any decision on the basis of the content of this update, you should first seek specific professional advice and verify its content. Copyright Willis 2014. All rights reserved.

Willis Limited, Registered number: 181116 England and Wales. Registered address: 51 Lime Street, London EC3M 7DQ. A Lloyd’s Broker, Authorized and regulated by the Financial Conduct Authority for its general insurance mediation activities only.

Willis Limited

The Willis Building51 Lime StreetLondon, EC3M 7DQUnited KingdomTel: +44 (0)20 3124 6000

www.willis.com